Why aren't education, training, and the associated services for people to acquire skills the central issue for the American labor movement?
Traditionally, labor saw its role as one of mobilizing skilled and unskilled workers to confront capitalists, to guarantee workers access to work, and a share of the profits. But it was thought that labor should stay out of the decision-making process because it is not the role of American labor to participate in decisions regarding the allocation and development of skills.
The “new paradigm” as captured by Morty Bahr is: “The function of American labor is not to decide who should get what, but who should get what next.”
In the 1940s and 1950s blue-collar workers had good jobs that produced high wages and promotions. But tenure and standing determined wages and promotions, not learning that took place outside the job. From 1946 to 1983 the wages of blue-collar workers increased relative to those with a college education. Inflation kept real wages low, so employers had a cushion to let take-home wages increase. But when former Chairman of the Federal Reserves Volcker significantly reduced inflation, the real cost of labor increased. The result was a recession as companies downsized, contracted out, or laid-off workers to reduce their overall costs. Fewer higher-skilled workers, combined with new technology (which became relatively less expensive), allowed output to rise with fewer workers. As a result, there were large productivity increases. But while industry benefited, workers did not.
At the same time, government pursued a free-trade strategy and offered workers a re-training deal to contend with the further downsizing brought about by globalization. It was argued that the combination of free trade and re-training would lead to better jobs. American business agreed to any level of training in exchange for free trade, but the bargain has never been kept. However, training programs do not create jobs and the public training programs at that time failed to bring workers high wages because there were few jobs to be trained for. (Later, in the 1980s and 1990s, training programs met with more success because there were jobs available.)
In the post 1983 period, restructuring occurred by industry and by region, old-line manufacturing declined, and more high-technology enterprises succeeded. Jobs were gained on both coasts and women benefited more than ever before. But people in the middle of the country lost jobs. Those workers who got the jobs were younger, more highly skilled, and female.
As union members lost jobs and industries with high union density lost positions, training did not appear to be a good bargaining strategy for labor. Training is a second order strategy. The main thrust of the struggle between labor and management is about power. But as growth occurred without government intervention, it was increasingly clear that the private sector was benefiting from globalization and technological change—for which it needed more flexibility to respond to the profound changes in the economy. (Even Europeans began working hard to become more flexible and develop a more American model.) From a worker's point of view, however, flexibility is just a fancy word for fired. So the fight in American labor is still about jobs, not training. But it's time for American labor to step up and demand a national training system in exchange for free trade and in response to technological change.
The penetration of new technology has allowed us to create new kinds of value, not just mass production where the same item is produced with a standardized production process and the primary objective is to make it faster and cheaper. Mass production is something that foreign producers can now do cheaper and, in some cases, better. Process technology has raised the quality of production. For example, the Japanese introduced lasers and pin settings into the line production system for car doors, when the United States was still using block and tackle. Car doors in Japanese autos fit tightly and closed with a click, not a clunk, and today everyone uses the Japanese production process.
The American response to technology has been to utilize it to achieve a higher level of quality and more variety and customization: short production runs, customized service, and higher levels of responsiveness, especially with regard to time. For example, we can now watch movies whenever we want to or use the ATM any time. Producing variety and customization requires problem-solving skills and the ability to deliver good customer service. For example, engineers need to understand the customer to design a car: they need empathy, interpersonal skills, or what we would call “soft skills.” The real skill required to produce quality is the ability to take responsibility for the final product—“it's not my job” doesn't work in a quality environment. The added novelty and customization of services result in the creation of a new system of value. But this means that we can no longer measure productivity the way we used to. Today, 60 percent of productivity increases cannot be captured by the traditional output per hour measure.
As we have moved away from manufacturing to services, the basic managerial model has changed: you just hire the number of people you need to produce the product. Technology has transformed the production system into a virtual system of production that has implications for skill. Technology has not really empowered less skilled workers as much as it empowered managers and white collar professionals. This is evident in the large earnings increases in the late 1980s and 1990s garnered by managers and professionals relative to other less skilled workers. Flexible systems with a flexible set of outcomes benefit the person who exploits the technology. Technology substitutes for low-skilled workers, but complement high-skilled workers. Bargaining should now be about skills, not power.
Today's managerial model consists of outcome-based standards aligned with the skills of the workers; responsibility is moved down the production line. Any organization can be adapted to this model, but certain cognitive styles become essential. When everything is changing, it is important to have skills that allow you to deal with change in a positive way. Failure, or job loss, cannot be seen as permanent and pervasive, nor can they be taken personally. These cognitive skills determine how successful you are in a changing environment. This attitude is a learned behavior, it is not self-esteem, but a cognitive skill determined by one's experience in life.
Demand for more skilled workers will continue to grow because it comes out of the global economy, which will continue to substitute technology for current skills and work. The economic slowdown and recession also accelerate this process, by creating opportunities to re-structure and downsize. This changing relationship between labor and technology can be seen, for example, in the restructuring of the U.S. furniture industry that took place in the 1980s. Recessions accelerate the process of dislocation of unskilled workers and increased demand for higher-skilled workers.
The retirement of the baby boom over the next 20 years means that we will lose about 46 million workers with some college skills. Because the educational system has increased attainment, we will gain about 49 million with some college for a net gain of 3 million. But Bureau of Labor Statistics projects a 22 percent increase in jobs that will require some college by 2010, resulting in a net deficit of about 12 million workers. What can we do about that? We could support an immigration policy that draws workers from overseas, or we can try to slow down the retirement of the baby boomers. But increasing the retirement age does not work well because generally it is low-skilled workers who decide not to take early retirement. Furthermore, increasing H1-B visas to get more skilled labor is not politically viable. So, we can take work offshore or we can get aggressive about increasing the skills of Americans.
Increasing the skills of all Americans is the missing element in our labor strategy. The 18- to 24-year-old population that is now going through the school system is finding that the money is not there for higher education: the states are facing tight budgets and are de-funding higher education. Human capital has become like a barrel of oil in that we want it cheaper, faster, better. So we need more efficiencies in the pre-K-16 education system. The problem is that education delivery is not governed by a single entity, and we cannot get more human capital at the current rate of productivity.
The national standards movement is really about efficiency, because we need to increase spending all the way through the system. This is a big problem for the state governors. And where do non-traditional students, adults, and incumbent workers go? We once had a mission to help the baby boomers—this was the GI-bill, but it is now gone. The preferred client is the 18- to 24-year-old, because colleges can offer a standardized, mass curriculum. It is very costly to serve the non-traditional student because that requires customization, and the current system is somewhat rigid.
Since funding for the Employment and Training Administration was cut, the part of the U.S. Department of Labor's mission that is charged with helping these people is effectively defunct. Currently, our second-chance system is almost non-existent—it's only the first chance that counts. In that first-chance system, we will demand high standards for all and, in the process, ignore dislocated workers and students who require remediation.
But trying to build an academic system for everybody is difficult. The current curriculum is best at producing general reasoning abilities; the content of academic curriculum does not match up well with job requirements in particular. For example, only 5 percent of workers use algebra on the job but nearly two-thirds take algebra in high school. Furthermore, learning and life choices need to be linked, and currently the link between them is the missing middle in education policy. We have to start in K-16 education to teach in context and incorporate learning by doing. The curriculum needs to be aligned so that we are building one education and training system for all young people. A training apparatus alone won't solve our looming skill demand issues.
The leadership of the AFL-CIO needs to take on the issue of the structure of opportunity to learn and social issues, rather than the issue of power.